Strategic Analysis of Woolworths: HI5019 Strategic Info Systems

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Assignment 1 (Strategic Analysis)
Individual Assignment
HI5019 STRATEGIC INFORMATION SYSTEMS
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Contents
Introduction......................................................................................................................................3
Part 1 – (External Analysis).............................................................................................................4
1. Business Background...............................................................................................................4
2. What industry is it....................................................................................................................5
3. General environment analysis..................................................................................................6
4. The industry environment........................................................................................................6
5. Competitive environment........................................................................................................ 6
6. Opportunities and threats......................................................................................................... 6
Part 2 – (Internal Analysis and Proposal)........................................................................................ 6
1. The Firm’s resources, tangible and intangible.........................................................................6
2. Capability identification.......................................................................................................... 6
3. Core competencies analysis..................................................................................................... 6
4. Propose suitable information system that meets the chosen company’s needs.......................6
5. Evaluate the proposed system and provide your recommendations........................................6
Conclusion....................................................................................................................................... 6
References........................................................................................................................................6
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Introduction
External and internal analysis of organizations provides an overview of the current situations and
problems which will analyze in this assignment. This assignment is based on the Woolworths
Supermarkets which is established in the year of 1924. The organization has a large chain of the
supermarket stores in Australia which is providing packaged food and vegetables to Australian
people. A large range of products and services are available by the chain of the supermarket in
Australia. This assignment will mainly produce an overview of the external environment of the
company. In the starting of this assignment will provide an overview of the company and
industry in which it is working. That general environment analysis will be produced in the
assignment and then an industry analysis will be executed in the assignment. Competitive
environment will also be analyzed in the research and those opportunities and threats for the
company will be determined in the research. After that, an internal analysis will be conducted of
the organization in which tangible and intangible resources will be analyzed. Organisational
capabilities will be analyzed in this assignment for core competencies will also be analyzed. At
the end of the assignment, the suitable information system will be developed for the organization
according to the needs of the situation and some recommendations will be developed for the
organization.
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Part 1 – (External Analysis)
1. Business Background
Woolworths Supermarket has been established in the year 1924 in the Duopoly market. The
company is having its specialization in the packaged food, vegetables, fruits, meat and other
household products. The company is currently having approximately 1000 stores in Australia in
which 19 stores are considered as convenience stores. Woolworths Supermarket is also working
with the online channel to sell its products in the targeted market. Different loyalty schemes are
developed by the company to engage and retain its customers for a long time to retain its market
position. Approximately 25000 employees are working with the Woolworths to provide a better
service to the customers. The company believes to provide quality in the large range of products
to provide convenience to the targeted market (Woolworths Group, 2018).
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2. What industry is it
Woolworths Supermarket is working in the business to customer’s retail market. It can be
considered the retail grocery market in Australia. This industry is considered the most
competitive market in Australia in which several companies are currently working. It is very
crucial to managing the existence in the market according to the needs and demands of the
customers. It has been analyzed that in the year 2017 this industry has generated $102 billion as a
sum of revenue. Approximately 3, 62,000 people are employed in this industry and providing
their services for the targeted market. The annual growth of the market has been analyzed by 3%
on an average rate from the year of 2013-2018. It has been analyzed that around 1800 small,
medium and large-sized organizations are working in the retail grocery and supermarket industry
of Australia which has developed a huge competition in the market (IBISWorld, 2018).
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3. General environment analysis
Basically, in the general external environment, almost those factors are considered which creates
a huge impact on the internal environment and on the operations. General environment analysis
of Woolworths Supermarket is given below:
Economic: GDP, inflation, interest, unemployment, purchasing power rates are mainly
considered in this factor which creates a huge effect on the internal operations. GDP rates effects
on the development scope and also on the production of the products. Inflation directly effects on
the price and cost structure of the organization. It is essential for the management to make
changes in the strategies for cost determination and pricing of the products (Portney, 2013).
Physical: In this factor mainly man-made things are considered which directly effects on the
people. Tangible assets are mainly considered in this physical environment. Infrastructure is the
key concern which may affect the organization. Change and development in the infrastructure
may effect on the internal operations of the company. Regular change in the infrastructure
creates a need to make changes accordingly in the internal working environment for the
employees as well (Ryu, et. al. 2012).
Socio-cultural: These factors create a huge effect on the development of strategies of the
organization. Education, language, Attitudes, and beliefs of the people where the company is
operating its business create a huge effect. Woolworths Supermarket is working in Australia
where multicultural factors lead so it is essential to use these factors in the strategies
development.
Global: Internationalisation is also affecting the business of the company. Different international
companies are making their presence in the grocery supermarket industry of Australia.
Technological: Advancement in the technology creates a compulsion to make changes in the
operations. Adoption of the online sales channel is also affected by the technological factor. It
helps to manage the lead in the sector (Hakansson, 2015).
Legal: The Company is working in the retail market which directly effects on the consumers so
it is essential to use the legal framework in the internal business operations. It is essential for the
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organization to provide its services according to the Australian Consumer Law which can help to
develop a legal framework for the operations.
Demographical: Population is a most considerable factor which is also linked with the external
environment. Growth in the population in particular geographical zone effects on the demands
and supply chain so it is essential for the company to analyze the population growth of each of
geographical area where it is working.
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4. The industry environment
It is essential to make an analysis of the industry environment by the using porter five forces
analysis on the whole retail grocery and supermarket industry of Australia. The analysis of the
industry is given below under the points-
Supplier power – Retail industry mainly focuses on the sales of the products. Retail grocery and
supermarket industry has a huge influence on the supplier power. Grocery retailers are having a
large chain of suppliers and price and demands of the products is highly affected by the supplier
power. It is essential for the companies to fulfill the demands of the supply but the companies
depend on the suppliers to accomplish the market needs (Dobbs, 2014).
Buyer power –Retail grocery is directly linked with the customers and it is highly influenced
with the buyer power. Pricing of the products has to be appropriate according to the customers
which can help to manage the sales.
Potential entrants – Growth and development of the existing organization attract to the others to
start setup in the retail grocery. The retail grocery industry has a huge threat of new entrants due
to higher demands and profits in the market. Consistency in the sales is the other factor which
motivates to the big business groups to mark their presence in the retail grocery market.
Substitute products –Retail grocery organizations sell the packaged products from different
manufacturers and suppliers. It always has a threat of the substitute of products due. Most of the
customers consider the price factor in buying any product from the supermarket which may
influence to buy a substitute product from the supermarket.
Rivalry among competitors –Many companies are working in the retail grocery and
supermarket industry as Aldi, Coles, and Woolworths Supermarket etc. which has created much
competition in the organization (Ewing, et. al. 2013).
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5. Competitive environment
Some of the factors are given below to analyze the competitive environment of the Woolworths
Supermarket-
Strategic group – It can be considered the group of companies which have the same business
models. Aldi, Wesfarmers, Coles and Woolworths Supermarket are the strategic group of
companies.
Rivalry in the group –Aldi is the key rivalry for the Woolworths Supermarket due to recent
growth in the business of Aldi.
Capabilities of relevant firms – Aldi has a long chain of the retail stores approximately 500
stores in the all over Australia enhance the capabilities to deal with more customers (ALDI,
2018).
Strategies of relevant firms –Aldi has used the economic pricing strategies in Australian retail
and grocery industry as well which has helped to make a successful debut in Australia.
Threats from rivalries– The major threat from Aldi is on the market share of the Woolworths
Supermarket. Regular growth in the sales and business has developed the risk on the Woolworths
Supermarket.
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6. Opportunities and threats
Some of the opportunities and threats are given below for the Woolworths Supermarket –
Opportunities
 Expansion of business in the electronic
market segment
 International market
 Expansion in the clothing market
 A restaurant chain in the supermarket
Threats
 Enhanced rivalry
 International companies
 Fluctuations in demands
 Unstable economic market conditions
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Part 2 – (Internal Analysis and Proposal)
1. The Firm’s resources, tangible and intangible
There are several resources of the firm and has been classified on the basis of tangible and
intangible resources. Tangible resources are physical components of the business. In the context
of Woolworth's lands, stores, inventory, funds, equipment such as loading vehicles are all the
form of tangible resources. Tangible resources generally have depreciation value and will not
provide a significant advantage to the Woolworths in the long run as competitors can easily
acquire the identical form of resources. It has been stated that the total average tangible assets of
Woolworth’s group are $ 13,042 million (Woolworthsgroup.com.au, 2018).
On the contrary, intangible resources are the rest of the resources that don’t have any physical
identity but still can be acquired by the company. In the context of Woolworths Brand
reputation, patents, trademarks, intellectual property rights are all the example of intangible
resources of the company. The brand reputation of the Woolworths has developed over a time
and cannot be purchased by money. Intangible resources of the Woolworths are the primary
source of the competitive advantage. Intangible resources have great value to the company
though they don’t have the physical form or identity and can’t the state in the financial report
(Woolworthsgroup.com.au, 2018).
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2. Capability identification
Woolworths will adopt an integrated form of strategy by utilizing the combination of both the
cost leadership and differential components. There are several forms of capabilities identified in
the context of the Woolworths.
Effective supply chain: Woolworths has an efficient form of the distribution network and has
both the capability and resources are available for outbound and inbound logistics. Combination
of both the tangible and intangible resources has achieved savings in cost to achieve a higher
EBIT over Coles. The level of cost-saving benefits will provide Woolworths an unfavorable
public identity. It has been identified that the supply chain of Woolworths has very effective and
it helps the company in achieving the competitive advantage (Mindtools.com, 2018).
Brand reputation: Reputation of Woolworths as a fresh grocery was been built over the years.
This has been done by the improving significantly over the years by implementing the consumer
experiences and feedbacks. So it has been stated that brand reputation is the capability. Brand
reputation is identical for the Woolworths and is providing differentiation for its competitors.
Top management: Despite the impacts of recession and rising inflation rate, Woolworths is able
to achieve the high growth rates. All this will attribute the top management functioning of the
Woolworths top management.
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3. Core competencies analysis
Core competence analysis is essential for any business organization sustainability and progress.
Woolworth’s has always focused on the core competencies and upgraded their capabilities to
develop their strengths along with eliminating their weaknesses. In order to analyze the three
tests or criteria it is significant to analyse the true core competencies. These are:
Relevance: This is the test of relevancy. The competence analysis must provide their customer
something that will strongly influence them. It has been evident that the effective supply chain is
the attribute that is strongly influencing the clients and customers of the Woolworths and because
of this attribute is going lead ahead of their competitors in the market (Wilkinson, 2013).
Difficulty of imitation: This test will help in identifying the USP of the company. It is very
crucial for the organization to develop the core competencies that are difficult to imitate. In the
context of Woolworths, they are selling actually fresh food and it is their core competence also
aligning them with the capabilities of Brand reputation. The customer is identifying the brand
reputation of Woolworth with the fresh foods and also stated them as fresh people (Wilkinson,
2013).
Breadth of application: This is the test that testing the competency of the organization to
penetrate the potentially large number of markets. In the context of the Woolworths, it has been
found that the management of the Woolworths will be effective and capable to explore the
different market and the outcome of this Woolworths has been expanded themselves in several
territories of the region.
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4. Propose suitable information system that meets the chosen company’s needs.
An effective information system is the current need of the business world and it is very crucial
that Woolworths should upgrade their information systems solution. There is an effective
information solution Known as Dimension Data`s Management Planning and Control (MPC)
solution that has been supplied by US-based Comshare to integrate budgeting, planning,
consolidation via single platform interface (ITWeb, 2018). It will provide Woolworths Ltd a
single national system of reporting that will enable the users to access the correct information via
servers to from any business location. This application is suitable for the context of the
Woolworths because of the user-friendly interface and also the ability to enter the information
via remote locations. This Information system solution will able to simplify the billing of
materials and create a balance of control and flexibility. Currently, Woolworths is using the
currently the Lotus spreadsheets for conducting financial analysis but that Information system
solution is not up to the mark as for recent changes in the business world.
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5. Evaluate the proposed system and provide your recommendations.
This has been evaluated that the proposed form of system is very helpful the operations of the
Woolworths functioning. This Information system solution will help in gaining the productivity
more rapidly than the current system. The most special benefit of this system is that it will create
the new performance parameters for the company and also it will help in getting information
from the centralized servers on the more effective way and also help in conducting the deep
analysis of the financial statistics (IT Web, 2018). This Information system solution is suitable
for Woolworths because it will help the company in analyzing the key development areas. This
proposed system has also beneficial for the end users of the Woolworths as it is providing the
support to end users more quickly than the current Information system. As per the trial run of the
proposed system, it has to recommend by the Woolworths management team that this proposed
IS solution will help to forecast and planning the sales that are not possible in the current IS
Solution.
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Conclusion
On the basis of the above report, it has been concluded that external environment analysis
supports to identify the threats and opportunities linked with the business. Analysis of rivalries is
significant to make changes in the market and sales strategies of a particular organization. It has
been analyzed that internal analysis supports to execute changes in the business to make a
successful attempt of the objectives. It is significant to analyze the resources and capabilities of
the organization to identify the possibilities of changes in it. Competencies analysis is effective
to conduct in the organization to identify that capabilities and sources are properly utilized or not
in the organization.
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References
1. ALDI. 2018. About Aldi [Online]. Available at: https://corporate.aldi.com.au/en/about-aldi//
[Accessed on 22 Aug. 18].
2. E. Dobbs, M. 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), 32-45.
3. Ewing, M. T., Wagstaff, P. E., & Powell, I. H. 2013. Brand rivalry and community
conflict. Journal of Business Research, 66(1), 4-12.
4. Hakansson, H. 2015. Industrial Technological Development (Routledge Revivals): A
Network Approach. Routledge.
5. IBISWorld. 2018. Supermarkets and Grocery Stores - Australia Market Research Report
[Online]. Available at: https://www.ibisworld.com.au/industry-trends/market-research-
reports/retail-trade/food-retailing/supermarkets-grocery-stores.html [Accessed on 22 Aug.
18].
6. ITWeb. 2018. Woolworths selects Web-based strategic planning and analysis solution.
[online] Available at: https://www.itweb.co.za/content/dgp45vaGO1ZMX9l8 [Accessed on:
22 Aug. 2018].
7. Mindtools.com. 2018. Core Competencies AnalysisBuilding Sustainable Competitive
Advantage. [online] Available at: https://www.mindtools.com/pages/article/newTMC_94.htm
[Accessed on: 22 Aug. 2018].
8. Portney, K. E. 2013. Taking sustainable cities seriously: Economic development, the
environment, and quality of life in American cities. MIT Press.
9. Ryu, K., Lee, H. R., & Gon Kim, W. 2012. The influence of the quality of the physical
environment, food, and service on restaurant image, customer perceived value, customer
satisfaction, and behavioral intentions. International Journal of Contemporary Hospitality
Management, 24(2), 200-223.
10. Wilkinson, J. 2013. Core Competencies Definition • The Strategic CFO. [online] The
Strategic CFO. Available at: https://strategiccfo.com/core-competencies/ [Accessed on: 22
Aug. 2018].
11. Woolworths Group. 2018. About us [Online]. Available at:
https://www.woolworthsgroup.com.au/page/about-us/ [Accessed on 22 Aug. 18].
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12. Woolworthsgroup.com.au. 2018. Strategy and objectives - Woolworths Group. [online]
Available at: https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-
and-objectives [Accessed on: 22 Aug. 2018].
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